Opposition councillors refused to back down over the use of developers’ money by Reading Borough Council at Monday’s cabinet meeting.

An independent report was commissioned by the authority and undertaken by Wokingham Borough Council’s auditor on Section 106 funding when RBC was under Labour control in 2007/08.

A S106 agreement is a planning obligation by a developer often in the form of a cash sum to help mitigate the impact of a development and enhance the community.

The report found “no evidence of political influence, fraudulent activity or corruption” in the process of developer contributions but said there were “control weaknesses” in the system.

It criticised the council for not having any senior manager with overall responsibility for the management of S106 which lacked “council-wide co-ordination, strategic control and direction”.

The report recommended a manager be identified to ensure “leadership and accountability” in the future and further highlighted the need for RBC to review its policies with regard to contributions.

It noted errors and inconsistencies including the authority receiving a “relatively low proportion” of £4 million with regard to a S106 agreement surrounding a multi-use games area at Prospect Park.

The report raised fears the council could legally be “open to challenge” as it had used S106 money for maintenance which may not be in line national guidance that suggests this should not be done without the permission of the developer.

At a cabinet meeting at the Civic Offices on Monday night deputy Labour leader Councillor Tony Page said: “The authority has been given a clean bill of health as a result of some very detailed scrutiny.”

He explained that the report had looked into 25 random S106 agreements and had not identified any occasion where money was spent improperly and mistakes were being put right.

Conservative Cllr Isobel Ballsdon, whose own investigation in 2009 led to the report being pursued, welcomed the report and was pleased a robust system would now be put in place. But she added it highlighted the “shambolic” way Labour had dealt with developer contributions with money being spent on projects miles away from the communities impacted.

Tory leader Andrew Cumpsty called for transparency and for the whole report including full details of an undisclosed legal review to be made public to reassure people in the town.